Inflation inches up to 1.3% despite cheaper food

The cost of living in Canada went up by 1.3 per cent in the year ended in September, up from 1.1 per cent the previous month.

Statistics Canada reported Friday that food prices were the biggest cause of the deceleration, as the food index posted its smallest year-over-year gain since February 2000.

Food prices had risen sharply since the middle of 2015 due to the plunging loonie increasing costs for a whole host of imported produce.

But that has largely settled now as the loonie has found a range of around 75 cents. So food price hikes have cooled and in some cases reversed.

Prices for food purchased in stores are now as cheap as they were in January 2015, down 0.9 per cent in past 12 months.

“This is an amazing turn from the food-fired inflation earlier this year, with huge reversals in meat, fruit and vegetables the biggest drivers,” BMO economists Douglas Porter and Robert Kavcic said. “Some of this turn reflects the impact of a steadier Canadian dollar from the pronounced weakness earlier this year.”

Gas cheaper too

Gasoline is also getting cheaper. Pump prices were 7.9 per cent lower in September than they were the same month a year earlier.

Inflation was in positive in every Canadian province, but by a smaller amount in only two provinces — Alberta and British Columbia.

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